Real Claims: Who Pays for an Apartment Fire?

Suppose you cause a small fire in your apartment (in the real claim an appliance was left on too long and caused substantial smoke damage). Your landlord has insurance for the building, and you don’t have insurance on your belongings because you don’t have that much to worry about. So you just replace what you need and everybody’s happy, right?

Not quite. Your landlord submits bills for the smoke damage, clean up, and any lost rents to his insurance company. The insurance company reviews the bills, and if everything is in order they write a check to the landlord. Then they send you a letter…

The insurance company has the right to “subrogate” (take legal action in place of the policyholder) against the person responsible for the damage. The letter you get might say something like this: “Our investigation has revealed that you are responsible for the recent fire. The landlord’s damages totaled $5,250. Please remit your check to us in this amount within 30 days to avoid legal action.”

This claim could have been much worse if the building had caught on fire. Then the tenant could have been responsible for the cost to rebuild the entire building.

So what could have been done? If the tenant had taken out renters insurance, the liability portion of the policy would have kicked in to cover the landlord’s damage. Of course, there also would have been coverage for the tenant’s belongings.

A basic renters policy usually costs about $150. If you get it with your auto insurance, many companies give you a significant discount for having both coverages together.

Next steps:

The information in this post is general in nature, and geared toward insurance conditions in Western New York. As always, you should speak with an insurance adviser to determine your specific insurance needs.